On December 31, journalize the write-offs for 2016 under the allowance method. Also, journalize the adjusting entry for uncollectible accounts. The company recorded $5,250,000 of credit sales during 2016. Based on past history and industry averages, ¾% of credit sales are expected to be uncollectible. Refer to the Chart of Accounts for exact wording of account titles. Casebolt Company wrote off the following accounts receivable as uncollectible for the first year of its operations ending December 31, 2016:
Customer Amount
Shawn Brooke $4,650
Eve Denton 5,180
Art Malloy 11,050
Cassie Yost 9,120
Total $30,000

Casebolt Company

Journal Entries:

Dec. 31, 2016

Debit Allowance for Uncollectible Accounts $30,000

Credit Accounts Receivable $30,000

To write-off uncollectible accounts.

Dec. 31, 2016

Debit Bad Debts Expenses $69,375

Credit Allowance for Uncollectible Accounts $69,375

To record bad debts for the year and bring the Allowance for Uncollectibles to a credit balance of $39,375.

Explanation:

a) Data and Calculations:

Credit sales for 2016 = $5,250,000

Uncollectible allowance based on past history and industry = 3/4% = $39,375 ($5,250,000 * 3/4%)

Actual accounts written off as uncollectible = $30,000

Customer Amount

Shawn Brooke   $4,650

Eve Denton           5,180

Art Malloy            11,050

Cassie Yost          9,120

Total                $30,000

Analysis:

Dec. 31, 2016 Allowance for Uncollectible Accounts $30,000 Accounts Receivable $30,000

Dec. 31, 2016 Bad Debts Expenses $69,375 Allowance for Uncollectible Accounts $69,375

answer; the correct answer to the above statement is (true);

answer; limited pay life;